It's proving a rough time for media magnate Lord Black of Crossharbour and his Hollinger empire, as the outgoing proprietor of the Telegraph newspapers faces allegations of financial malfeasance. Black's troubles started in May last year, when a minority shareholder in Hollinger International raised questions about $300 million in payments made to Black and other Hollinger execs since 1995. The committee set up by Hollinger's board to investigate soon discovered 'inaccuracies' in SEC filings, and admitted in November that Black and three other directors had received $15.6 million in unauthorised fees. Black resigned as chief executive, but denied any wrongdoing and vowed to repay $7.2 million by June 2004. The SEC launched its own investigations, but Black refused to testify, invoking the fifth amendment. At the same time, Hollinger Inc, saddled with a $120 million debt, revealed it might not be able to meet interest payments.
In January, Black had to ask for an extension on his first repayment of $850,000. He admitted he has put his £14 million London home up for sale.
Black boldly announced that he would 'drive a silver stake' through allegations of impropriety. In November 2003, he told reporters: 'I urge you, no matter how addicted you are to representing me as having been shamed, disgraced, and chased out as a scoundrel, to contemplate the possibility that there's a chance that I might be innocent. As time will prove, I am.' We wait and see.
THE STRAIGHT TALK
With US investigators sniffing around, prospects aren't looking rosy for Black. Hollinger appointed investment bank Lazards to conduct a strategic review of its assets, which include the Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post. Last month, the Barclay brothers, Sir David and Sir Frederick, offered Black $468 million for his stake.
The SEC will report its findings at the end of February. In the meantime, Hollinger said it was removing Black as chairman and suing him for more than $200 million. Black's humiliation has been made worse by the closure of his tab at his favourite New York restaurant Le Cirque 2000 and Hollinger's refusal to continue funding his lavish lifestyle.
Black is now fighting for his corporate life.
As he steels himself against the continuing onslaught, will he seek fortitude in the words of FDR, the subject of his biography: 'The only thing we have to fear is fear itself'?